As we reported at the time, in February this year the Fair Work Commission (FWC) ruled to cut Sunday penalty rates in the retail, pharmacy, fast food and hospitality sectors. The FWC has now ruled on the implementation of the reductions – which are to be phased in over the next four years – starting on 1 July 2017.

Partner Andrew Tobin and Law Graduate Emma Scotney discuss the recent Fair Work Commission ruling.

When will the cuts take effect?

On 6 June 2017 the FWC ruled that Sunday penalty rate cuts will be phased in from 1 July 2017 over four financial years in the retail and pharmacy sectors, and over three financial years in the hospitality and fast food sectors.

Public holiday rate reductions will take effect on 1 July 2017 immediately – in each of the four sectors mentioned above as well as in the restaurant sector.

The decision to have no phase in period for the public holiday cuts was made on the basis that the number and timing of public holidays mostly occur in the first half of the year. The FWC also considered the aggregate effect of the impact of the cuts to public holiday penalties to be less than the impact of the reductions in Sunday penalty rates.

The phased in reductions to Sunday penalty rates for the relevant industry sectors are set out below:

Retail Award 2010

Full time and part time employees

1 July 2017 200 per cent →195 per cent

1 July 2018 195 per cent→180 per cent

1 July 2019 180 per cent→165 per cent

1 July 2020 165 per cent →150 per cent

Casual employees (inclusive of casual loading)

1 July 2017 200 per cent→195 per cent

1 July 2018 195 per cent→185 per cent

1 July 2019 185 per cent→175 per cent

Pharmacy Award 2010

Full time and part time employees

1 July 2017 200 per cent→195 per cent

1 July 2018 195 per cent→180 per cent

1 July 2019 180 per cent→165 per cent

1 July 2020 165 per cent→150 per cent

Casual employees (inclusive of casual loading)

1 July 2017 225 per cent→220 per cent

1 July 2018 220 per cent→205 per cent

1 July 2019 205 per cent→190 per cent

1 July 2020 190 per cent→175 per cent

Hospitality Award 2010

Full time and part time employees

1 July 2017 175 per cent→170 per cent

1 July 2018 170 per cent→160 per cent

1 July 2019 160 per cent→150 per cent

Fast Food Award 2010

Full time and part time employees

1 July 2017 150 per cent→145 per cent

1 July 2018 145 per cent→135 per cent

1 July 2019 135 per cent→125 per cent

Casual employees (inclusive of causal loading)

1 July 2017 175 per cent→170 per cent

1 July 2018 170 per cent→160 per cent

1 July 2019 160 per cent→150 per cent

The public holiday penalty rate cuts will be reduced as follows:

Retail, Pharmacy, Hospitality and Fast Food Awards 2010

Full time and part time employees

1 July 2017 250 per cent →225 per cent

Casual employees

1 July 2017 275 per cent →250 per cent

Restaurant Award 2010

Full time and part time employees

1 July 2017 250 per cent→225 per cent

Casual employees

1 July 2017 to remain at 250 per cent

Litigation is ongoing, with the SDA and United Voice having flagged an appeal to the penalty rates decision generally, to be heard in the Federal Court.

Assuming that the most recent decision of the FWC takes effect on 1 July 2017, its precise impact will vary in individual workplaces dependent upon the specific industrial arrangements in place. Some employers will have the choice to implement the reductions immediately as per the phase-in timetable. Others may be bound by superior arrangements provided for in applicable employment contracts or enterprise agreements.